TaxTMI 
TaxTMI 
Finance Act, 2007 - Explanatory Notes on provisions relating to Direct Taxes
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....tification of certain charitable and religious entities by power of approval by the prescribed authority. 12.1-12.5 10(23EC). Exemption for certain incomes of investor protection fund set up by commodity exchanges. 13.1-13.4 10(23FB), 10(23FB) Clause (c) of Explanation 1. Exemption for certain income of a venture capital company or venture capital fund. 14.1-14.3 10AA(4). Tax benefit only for new unit in SEZ. 15.1-15.6 12A(a), 12A(aa), 12A(1), 12A(2), 12AA(1), 12AA(2). Removal of the requirement for charitable or religious trust or institutions to file for registration within one year of creation or establishment. 16.1-16.7 13(1)(d)(iii) Allowing share investment in certain cases as a permissible investment mode for a trust or institution. 17.1-17.5 17(2)(ii) Explanation 1, Explanation 2, Explanation 3, 17(1)(iii) proviso. Clarification regarding concession in the matter of rent. 18.1-18.12 35(2AB)(v). Weighted deduction under clause (1) of sub-section (2AB) of Section 35 to be allowed for five more years. 19.1-19.4 36(1)(viia)(a), 36(1)(viia) Clause (ii) of Explanation, 10(15)(iv)(FA) Explanation. Deduction in respect of any provision for bad and doubtful debts to ....
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....-36.3 80-IA(4)(v)(b). Extension of time limit for generation or transmission or distribution of power by an undertaking of an Indian company set up for reconstruction or revival of a power generating plant. 37.1-37.3 80-IA(4)(vi), 80-IA(2), 80-IA(3). Deduction in the case of an undertaking laying and operating cross-country natural gas distribution network. 38.1-38.6 80-IB(4) fourth proviso. Extension of time limit for setting up industrial undertakings in the State of Jammu and Kashmir for the purpose of tax benefit under section 80-IB(4). 39.1-39.3 80-ID. Tax holiday for hotels and convention centres in specified area. 40.1-40.6 80-IC(2)(a)(i), 80-IC(2)(b)(i), 80-IE. Extension of benefit of tax holiday in respect of undertaking located in North-Eastern States (including Sikkim). 41.1-41.7 80A(3), 80AC. Consequential amendments in section 80A and 80AC. 42.1-42.4 92CA(3A), 92CA(4), 153(1) second proviso, 153(2) third proviso, 153(2A) third proviso, 153B(1) third proviso, 153B(1) forth proviso. Extension of Time limitation for making assessment where a reference is made to the Transfer Pricing Officer. 43.1-43.5 115JB clause (f) of Explanation, 115JB clause (ii) of Ex....
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....om per annum basis to per month basis. 59.1-59.6 206C(1C) Explanation 1, 206C(1C) Explanation 2. Definition of the expression "mining and quarrying" under section 206C of the Income-tax Act, 1961. 60.1-60.4 245A(b), 245A(g), 245C(1), proviso, 245C(1A), 245C(1B), 245C(1C)(c), 245C(4), 245D(1), 245D(2A), 245D(2B), 245D(2C), 245D(2D), 245D(3), 245D(4), 245D(4A), 245DD(2) proviso, 245E second proviso, 245F (2) first proviso, 245F(2) second proviso, 245H(1) second proviso, 245HA, 245HAA, 245K. Revised Settlement Scheme. 61.1-61.17 246A(1)(hb), 246A(1B). Providing for the right to appeal against the order holding a person as an assessee in default under section 206C(6A). 62.1-62.5 248. Provision of appeal by a person denying liability to deduct tax. 63.1-63.3 249(2)(a). Provision for Form of appeal and limitation: Consequential to the amendment made to section 248. 64.1-64.3 253(1)(c). Provision relating to approval of charitable institutions and funds. 65.1-65.3 254(2A) first proviso, 254(2A) second proviso, 254(2A) third proviso. Prescribing time-limit for grant of stay by the Appellate Tribunal. 66.1-66.6 271(1) Explanation 4, 271(1) Explanation 5, 271(1) Explanation 5....
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....ified the rates of income-tax for the assessment year 2007-08 and the rates of income-tax on the basis of which tax has to be deducted and advance tax has to be paid during financial Year 2007-08; (ii) amended sections 2, 7, 9,10, 10AA,12A, 12AA, 13, 17, 35, 36, 40A, 47, 49, 54EC, 56, 72A, 80A, 80AC, 80C, 80CCD, 80D, 80E, 80-IA, 80-IB, 80-IC, 92CA, 115JB, 115-O, 115R, 115WB, 115WC, 115WJ, 120, 132B, 139, 142, 143, 153, 153B, 172, 193, 194A, 194C, 194H, 194-I, 194J, 197A, 201, 206A, 206C, 245A, 245C, 245D, 245DD, 245E, 245F, 245H, 246A, 249, 253, 254, 271, 295, 296 of the Income-tax Act, 1961; (iii) substituted Section 245K, 248 of the Income Tax Act, 1961; (iv) inserted new sections 44DB, 72AB, 80-ID, 80-IE, 115WKA, 139C, 139D, 153D, 245HA, 271AAA, 292C in the Income-tax Act, 1961; (v) amended Chapter XII-E of the Income Tax Act, 1961; (vi) amended rule 60 and 68A of the second Schedule to the Income-tax Act, 1961; (vii) amended rule 3 and 4 of the Part A of the fourth Schedule to the Income-tax Act, 1961; (viii) amended section 2, 22A, 22C, 22D, 22DD, 22E, 22F, 22H, of the Wealth-tax Act, 1957. (ix) substituted section 22K of the Wealth-tax Act, 1957. (x) inserted new sec....
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...., including surcharge, on the excess of income over Rs. 10,00,000/- is limited to the amount by which the income is more than Rs. 10,00,000/-. For instance, the amount of income-tax and surcharge on a total income of Rs. 10,20,000/- calculated at the rates specified would have been Rs. 2,81,600/- i.e. income-tax of Rs. 2,56,000/- and surcharge of Rs. 25,600/-. The additional tax liability incurred thereon as compared to a person having a total income of Rs. 10,00,000/- is Rs. 31,600/-. However, additional income as compared to a person having a total income of Rs. 10,00,000/- is only Rs. 20,000/-. Therefore, marginal relief to the extent of Rs. 11,600/- will be available in this case as the additional tax liability cannot be more than the additional income. The total tax liability will, therefore, be Rs. 2,70,000/- instead of Rs. 2,81,600/-. 3.1-5 In the case of an artificial juridical person, surcharge shall be levied at ten per cent. of the income-tax payable on all levels of income. 3.1-6 Education Cess- An additional surcharge called the "Education Cess on income-tax" shall be levied at the rate of two per cent. on the amount of tax computed, inclusive of surcharge, in all ca....
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....tion Cess shall be levied at the rate of two per cent. on the amount of tax, inclusive of surcharge. 3.2 Rates for deduction of income-tax at source from certain incomes during the financial year 2007-2008 3.2-1 In every case in which under the provisions of sections 193, 194, 194A, 194B, 194BB, 194D and 195 of the Income-tax Act, tax is to be deducted at the rates in force, the rates for deduction of income-tax at source during the financial year 2007-08 have been specified in Part II of the First Schedule to the Act. The rates for deduction of income-tax at source during the financial year 2007-08 will continue to be the same as those specified in Part II of the First Schedule to the Finance Act, 2006. 3.2-2 Surcharge - The tax deducted at source in each case shall be increased by a surcharge for purposes of the Union as follows: (i) in the case of every individual, Hindu undivided family, association of persons and body of individuals, at the rate of ten per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds ten lakh rupees; (ii) in the case of every artificial juridical person, at the rate of....
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.... transfer property to avoid tax, assessment of bodies formed for short duration, etc. The rates are as follows: 3.3-2 Individual, Hindu Undivided Family, Association of Persons, Body of Individuals or Artificial Juridical Person Paragraph A of Part III of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company). In the case of individuals, the basic exemption limit has been enhanced from Rs. 1,00,000/- to Rs. 1,10,000/-. The exemption limit for every woman resident in India and below the age of 65 years of age has been enhanced from Rs. 1,35,000/- to Rs. 1,45,000/-. Further, the exemption limit for every individual resident in India and of the age of 65 years or more at any time during the previous year has been raised from Rs. 1,85,000/- to Rs. 1,95,000/-. The rates of tax during the financial year 2007-08 in the case of persons mentioned above are as follows: Income chargeable to tax Rate of income-tax Individual (other than individual woman resident in India and senior citizen....
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....perative societies - In the case of every co-operative society, the rates of income-tax have been specified in Paragraph B of Part III of the First Schedule to the Act. The rates are as follows- Income chargeable to tax Rate Up to Rs. 10,000 10% Rs. 10,001 - Rs. 20,000 20% Exceeding Rs. 20,000 30% No surcharge shall be levied. "Education Cess on income-tax" and "Secondary and Higher Education Cess on income-tax" shall be levied at the rate of two per cent. and one per cent. respectively of the amount of tax computed. No marginal relief shall be available in respect of Education Cess. 3.3-8 Firms - In the case of every firm, the rate of income-tax of thirty per cent. has been specified in Paragraph C of Part III of the First Schedule to the Act. Surcharge at the rate of ten per cent. shall be levied only in cases where the firm has total income exceeding one crore rupees. However, marginal relief shall be allowed to ensure that the additional amount of income-tax payable, including surcharge, on the excess of income over one crore rupees is limited to the amount by which the income is more than one crore rupees. In respect of fringe benefits chargeable to tax under section....
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....er one crore rupees is limited to the amount by which the income is more than one crore rupees. Also, in the case of every company having total income chargeable to tax under section 115JB of the Income Tax Act and where such income exceeds one crore rupees, marginal relief shall be provided. In respect of fringe benefits, in the case of a domestic company, surcharge shall be levied at the rate of ten per cent. of the amount of tax, irrespective of the amount of fringe benefits. In the case of a company other than a domestic company, in respect of fringe benefits, surcharge shall be levied at the rate of two and one-half per cent. of the amount of tax, irrespective of the amount of fringe benefits "Education Cess on income-tax" shall continue to be levied at the rate of two per cent. on the amount of tax computed, inclusive of surcharge in the case of every company. Also, such amount of tax and surcharge shall be further increased by an additional surcharge called "Secondary and Higher Education Cess on income-tax" at the rate of one per cent. of the amount of tax, computed, inclusive of surcharge. [Section 2 & First Schedule] 4. Clarificatory amendment to the definition of ....
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....sistant Director of Income-tax under sub-section (1) of section 117. This amendment will take retrospective effect and will be effective from 1st April, 1988. (vi) Similar amendments have also been carried out in the Wealth-tax Act so as to provide that Assessing Officer shall include Additional Commissioner and Additional Director. (vii) Clause (b) of sub-section (4) of section 120 has been amended so as to provide that the powers and functions conferred on or assigned to the Assessing Officer may also be exercised or performed by an Additional Commissioner. This amendment will retrospective effect and will be effective from 1st June, 1994. (viii) Clause (b) of sub-section (4) of section 120 has further been amended to provide that the powers and functions conferred on or assigned to the Assessing Officer may also be exercised or performed by the Additional Director. This amendment will have retrospective effect and will be effective from lst October, 1996. [Section 3, 42 & 83] 5. Widening the scope of capital assets. 5.1 Under the provisions of clause (14) of section (2), a capital asset has been defined to mean, property of any kind held by an assessee, whether or not con....
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....Under the source rule of taxation, income is taxed in the country where it is earned. Vide Finance Act, 1976, the source rule was introduced in section 9 through insertion of clauses (v), (vi) and (vii) in respect of income from interest, royalty and fees for technical services respectively. It was provided, inter alia, that where any sum by way of interest, royalty or fees for technical services is payable to a non-resident by a resident, such income would be deemed to accrue or arise in India, except where the interest or royalty or fees for technical services are relatable to a business or profession carried on by the resident payer outside India or for the purposes of making or earning any income from any source outside India. 7.2 Thus, a legal fiction was created whereby interest, royalty and fees for technical services were brought to tax on the basis of the source rule of taxation. Hence, irrespective of the situs of the services, the tax jurisdiction will be determined by the situs of the payer and the situs of the utilization of services. In terms of the said provisions, income does not have to actually accrue or arise in India to be deemed to accrue or arise in India. Th....
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....section 10. This clause provides that any amount received or receivable from the Central Government or a State Government or a local authority by an individual or his legal heir by way of compensation on account of any disaster shall be exempt. This however excludes any amount received or receivable by the individual or legal heir which has been allowed a deduction under the Income-tax Act on account of any loss or damage caused by such disaster. 8.3 For this purpose, the expression 'disaster' shall have the same meaning as is assigned to it under clause (d) of section 2 of the Disaster Management Act, 2005 (53 of 2005). Under the said clause (d), "disaster" means a catastrophe, mishap, calamity or grave occurrence in any area, arising from natural or man made causes, or by accident or negligence which results in substantial loss of life or human suffering or damage to, and destruction of, property, or damage to, or degradation of, environment, and is of such a nature or magnitude as to be beyond the coping capacity of the community of the affected area. 8.4 Applicability - This amendment will take effect retrospectively from the 1st day of April, 2005 and will, accordingly, appl....
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....2001 and ending on the 31st day of March 2011. 10.3 Applicability- This amendment will take effect from the 1st day of April, 2008 and will, accordingly, apply in relation to the assessment years 2008-2009, 2009-2010, 2010-2011. [Section 6] 11. Exemption for income of Central Electricity Regulatory Commission 11.1 A new clause (23BBG) has been inserted in section 10 to provide that any income of Central Electricity Regulatory Commission constituted under sub-section (1) of section 76 of the Electricity Act, 2003 shall be exempt. 11.2 Applicability- This amendment will take effect from the 1st day of April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent assessment years. [Section 6] 12. Substitution of the power of notification of certain charitable and religious entities by power of approval by the prescribed authority. 12.1 Under sub-clauses (iv) and (v) of clause (23C) of section 10, the income of the funds, trusts and institutions referred to therein is exempt from tax if they are notified by the Central Government. Sub-clause (iv) relates to any fund or institution established for charitable purposes having importance th....
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....y notification issued before the 1st day of June, 2007 under sub-clause (iv) of clause (23C) of section 10 shall be placed before each House of Parliament within the specified period. 12.5 Applicability- These amendments will take effect from the 1st day of June, 2007. [Section 6, 47 & 80] 13. Exemption for certain incomes of Investor Protection Fund set up by commodity exchanges. 13.1 Under clause (23EA) of section 10, any income, by way of contributions received from recognized stock exchanges and the members thereof, of notified Investor Protection Funds, set up by recognized stock exchanges in India, either jointly or separately, is exempt from income-tax. 13.2 Under the Income-tax Act, Investor Protection Funds of commodity exchanges do not enjoy such exemption even though they are similarly placed. A need was therefore felt to provide exemption to Investor Protection funds set up by commodity exchanges on the lines of the exemption presently available to Investor Protection Funds set up by recognised stock exchanges. Accordingly, a new clause (23EC) has been inserted in section 10 to provide exemption for any income, by way of contributions received from commodity exchan....
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....ompany whose shares are not listed in a recognised stock exchange in India and which is engaged in the- (i) business of - (A) nanotechnology; (B) information technology relating to hardware and software development; (C) seed research and development; (D) bio-technology; (E) research and development of new chemical entities in the pharmaceutical sector; (F) production of bio-fuels; (G) building and operating composite hotel-cum-convention centre with seating capacity of more than three thousand; or (H) developing or operating and maintaining or developing, operating and maintaining any infrastructure facility as defined in the Explanation to clause (i) of sub-section (4) of section 80-IA; or (ii) dairy or poultry industry. 14.3 Applicability- This amendment will take effect from the 1st day of April, 2008 and will accordingly apply in relation to the assessment year 2008-2009 and subsequent assessment years. [Section 6] 15. Tax benefit only for new unit in Special Economic Zone (SEZ). 15.1 Section 10AA of the Income-tax Act provides that in computing the total income of an entrepreneur, from his unit in the Special Economic Zone(SEZ), the following deduction shall be ....
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....the 10th day of February, 2006. [Section 7] 16. Removal of the requirement for charitable or religious trusts or institutions to file for registration within one year of creation or establishment. 16.1 Sections 11 and 12 grant exemption in respect of income of charitable or religious trusts or institutions. In order to claim such exemption, inter alia, the trust or institution is required to make an application for registration under clause (a) of section 12A in the prescribed form and in the prescribed manner to the Commissioner within one year from the date of its creation or establishment and such trust or institution has to be registered under section 12AA. 16.2 Where such application is made after one year, the Commissioner has the powers to condone such delay, if he is satisfied that the trust or institution was prevented from making the application within the specified time limit for sufficient reasons. If the Commissioner is so satisfied, the exemption under sections 11 and 12 shall apply to such trust or institution from the date of creation of the trust or establishment of the institution. However, where the Commissioner is not so satisfied, the exemption shall becom....
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....rust or institution for the purposes of availing exemption. Residual clause (xii) of section 11(5) allows any other form or mode as maybe prescribed in Rule 17C of the Income Tax Rules, 1962. Under clauses (iv) and (v) of Rule 17C, investment in the equity share capital of certain companies by certain entities has been permitted. 17.2However, under sub-clause (iii) of clause (d) of sub-section (1) of section 13, exemption under the provisions of section 11 or section 12 is not allowable in respect of the income of a trust or institution, if any shares are held by it for any period during the previous year after 30.11.1983. The only exception which has been provided is for shares held in a public sector company by the trust or institution. 17.3This had resulted in an anomalous situation whereby share investment is allowed as a permitted form or mode of investment under section 11(5)(xii) read with rule 17C, whereas such share investment stands prohibited under section 13(1)(d)(iii). 17.4With a view to harmonise the provisions of section 13(1)(d)(iii) with those of section 11(5)(xii), sub-clause (iii) of clause (d) of sub-section (1) of section 13 has been substituted with a new s....
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....ees the perquisite value would be equal to license fee payable by the employee; (ii) In case of other employees, the perquisite value would be equal to 10 per cent of the salary, if the accommodation is located in a city having population exceeding four lakhs and 7.5 % for other cities, based on the census of 1991. 18.3 The perquisite value so determined was to be reduced by the amount, if any, recovered from or paid by the employee. Rule 3 was further amended in 2005 so as to increase the rate of 10% to 20% and 7.5% to 15%. Further, the base for population was changed to 2001 census. 18.4 The constitutional validity of rule 3 relating to the perquisite value of residential accommodation as amended by SO. No. 940 (E) dated 25.9.2001 was challenged before various High Courts and before the Supreme Court. 18.5 The Hon'ble High Court of Jharkhand has, in the case of the Tata Workers Union and another Vs Union of India (256 ITR 725), upheld the validity of rule 3 as amended by notification S.O. No. 940(E) by holding that 'the impugned notification does not suffer from any arbitrariness because in our considered opinion, for rationalising and simplifying the procedure, the Board bro....
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....alue determined as under:- · For unfurnished accommodations located in cities having population of more than 25 Lakh and provided by an employer other than the Central Government or State Government - valuation will be 15% of salary; · For unfurnished accommodations located in cities having population of more than 10 Lakh but not more than 25 Lakh and is provided by an employer other than the Central Government or State Government - valuation will be 10% of salary; · For unfurnished accommodations located in other area and is provided by an employer other than the Central Government or State Government - valuation will be 7.5% of salary; · For unfurnished accommodation provided by Central Government or State Government - the valuation will be the licence fee · In case of unfurnished lease property, the valuation will be 15% of the salary or lease rental which ever is lower · In case furniture is provided, the actual hire charge (in case the furniture is hired from third party) or 10% of cost of furniture (if the furniture is owned by the employer) is to be added · In case any part of rent is being recovered from or paid by the employee, the valuation arrived above s....
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....serted to provide for valuation of any other benefit or amenity, etc in residual cases relating to any employer. These sub-rules shall take effect from the 1st day of April, 2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent years. [Section 11] 19. Weighted deduction under clause (1) of sub-section (2AB) of section 35 to be allowed for five more years. 19.1 The existing provisions of clause (1) of sub-section (2AB) of section 35, allowed in the case of a company, engaged in the business of biotechnology or in the business of manufacture or production of any drugs, pharmaceuticals, electronic equipment, computers, telecommunication equipment, chemicals or any other article or thing notified by the Board, a deduction of a sum equal to one and one-half times of the expenditure incurred on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority. 19.2 The existing provisions were not applicable in respect of any expenditure incurred by a company after 31st March, 2007 and no weighted deduction against expenditure incurred afte....
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....15) of section 10, the expression "scheduled bank" was defined to have the meaning assigned to it in clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36 which does not, inter alia, include co-operative banks. However, the definition of "scheduled bank" has been amended to include scheduled co-operative banks. The referral definition of "scheduled bank" occurring in the Explanation to the aforesaid item (fa) did not allow exemption of interest payable to a non-resident or a not ordinarily resident by a co-operative bank. In order to continue with this position, the definition of "scheduled bank" in its pre-amended form in clause (ii) of Explanation to clause (viia) of sub-section (1) of section 36 has being substituted for the existing Explanation in the aforesaid item (fa) so that the scope of the exemption allowed under the aforesaid item (fa) is not changed. 20.6 The amendment to the definition of "scheduled banks" as it appears in clause (viia) of sub-section (1) of section 36 will also have the effect of making the provisions of section 43D applicable to scheduled co-operative banks. 20.7 Applicability - These amendments will take effect, retrospe....
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....ted the deduction to twenty per cent. of the profits derived from the business of providing long-term finance. Considering the provision for outer limit to the deduction, which is twice the amount of the paid-up share capital and of the general reserves, the reduction in the level of deduction to twenty per cent will have the effect of elongating the time period during which the deduction can be claimed by the beneficiary "specified entities". Effectively therefore the specified entities are not adversely affected in the long term. 21.5 The provision has also been restructured to provide for different categories of entities (which now also includes co-operative banks) and their respective activities for eligibility of the deduction under the said clause. For claiming deduction under the said clause, (i) a financial corporation specified in section 4A of the Companies Act or a financial corporation which is a public sector company or a banking company or a co-operative bank (other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank) has to be engaged in the business of providing long-term finance in India for industrial or ag....
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....as withdrawn by the Finance Act, 2002 from assessment year 2003-04 on the ground that the operations of these funds were on a commercial line whereby they were collecting an exchange risk premium from borrowers of foreign currency to meet the actual losses on account of exchange fluctuation. ERAFs had been in existence for a considerable time since 1989 and it was felt that tax exemption to them had outlived the utility. Exemption under clause (14A) of section 10 was also withdrawn simultaneously. 22.4 The foreign exchange scenario in India has undergone a sea change since the launching of ERAS. There are several options available in the market for borrowers to hedge their foreign exchange risk. Responding to changed market dynamics ERAFs have been discontinued by the Industrial and Development Bank of India (IDBI), Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency (IREDA). The clause (x) of sub-section (1) of section 36 had, therefore, outlived its utility. 22.5 The Finance Act, 2007, accordingly, has omitted clause (x) from the said sub-section. 22.6 Applicability - This amendment will take effect from 1-4-2008 and will accordingly apply in relati....
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.... 25. Strengthening the provisions of section 40A(3). 25.1 The existing provisions of sub-section (3) of section 40A provided for disallowance of twenty per cent of the expenditure incurred, payment in respect of which is made in a sum exceeding twenty thousand rupees, otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft. 25.2 The said sub-section was inserted by the Finance Act, 1968 providing for disallowance of hundred per cent of the expenditure, if payment was made in contravention of its provisions. Subsequently, the Finance Act, 1995 amended this sub-section with effect from 1st April, 1996 to restrict the disallowance to twenty per cent of the expenditure, payment against which is made in violation of its provisions. 25.3 The provisions of the said sub-section were to act as an anti-evasion measure. It has come to notice that substitution of the disallowance of hundred per cent. by twenty per cent. has diluted the deterrence potential of the provisions. Therefore, to re-strengthen the deterrence potential, the Finance Act, 2007 has substituted sub-section (3) of section 40A to provide for hundred per cent disallowance of payments whi....
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....D include payments by the use of electronic clearing system through a bank account, a credit card and a debit card. The exceptions also include now payments upto Rs. 50,000/- on account of terminal benefits without reference to any salary ceiling. Considering the spread of banking services across the Country, exception earlier provided to payments made to various state level industrial development corporations and National Industrial Development Corporation has been withdrawn in the new Rule. The new Rule shall come into force with effect from the assessment year 2008-2009. 25.7 Applicability - This amendment will take effect from 1-4-2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years. [Section 14] 26. Provisions relating to business reorganisation of cooperative banks. 26.1 A new section 72AB has been inserted providing for carry forward and set-off of accumulated loss and unabsorbed depreciation allowance in business re-organisation of cooperative banks. The provisions are applicable to an assessee, being a successor co-operative bank, in a case where amalgamation has taken place during the relevant previous year. The ....
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....co-operative bank (other than shares already held by the resulting bank or its nominee or its subsidiary immediately before the transfer), become shareholders of the resulting co-operative bank, otherwise than as a result of the acquisition of the assets of the demerged co-operative bank or any undertaking thereof by the resulting co-operative bank; 26.5 A set of conditions have been provided both in the case of successor and predecessor cooperative banks, which have to be fulfilled for availing the provisions as enumerated in this section. (A) The following conditions have been prescribed for the predecessor co-operative bank:- (i) the said cooperative bank has been engaged in the business of banking for three or more years; and (ii) the said cooperative bank has held at least three-fourths of the book value of fixed assets as on the date of the business reorganisation, continuously for two years prior to the date of business reorganization. (B) The following conditions have been prescribed for the successor co-operative bank:- (i) the said cooperative bank holds at least three-fourths of the book value of fixed assets of the predecessor co-operative bank acquired through b....
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.... allowed and which would have been allowed to such bank as if the business reorganisation had not taken place; 26.8 With a view to lend clarity to the number of years to be reckoned for the purposes of set off and carry forward of loss and allowance for depreciation, it has been provided that - (i) the period commencing from the beginning of the previous year and ending on the date immediately preceding the date of business reorganisation, and (ii) the period commencing from the date of such business reorganisation and ending with the previous year shall be deemed to be two different previous years for the purposes of set off and carry forward of loss and allowance for depreciation. 26.9 It has also been provided that in a case where the conditions specified in sub-section (2) or notified under sub-section (4) of this section are not complied with, the set off of accumulated loss or unabsorbed depreciation allowed in any previous year to the successor co-operative bank shall be deemed to be the income of the successor co-operative bank chargeable to tax for the year in which the conditions are not complied with. 26.10 Further, a new section 44 DB has been inserted so as to ....
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....lation to the assessment years 2005-2006 and 2006-2007. 27.4 Further, vide Taxation Laws (Amendment) Act, 2006, a new clause (vi) was inserted in sub-section (2) of section 56, which, inter alia, provided that the whole of the aggregate value of any sum of money exceeding fifty thousand rupees, received without consideration by an individual or Hindu undivided family in any previous year from any person or persons on or after the 1st day of April, 2006, shall be chargeable to income-tax under the head "income from other sources". 27.5 Section 2(24), which relates to the definition of income, does not contain a reference to the sum of money referred to in the said clause (vi). With a view to provide a reference to said clause (vi) in the definition of income, a new sub-clause (xiv) has been inserted in section 2(24) to provide that 'income' includes any sum referred to in clause (vi) of sub-section (2) of section 56. 27.6 As clause (vi) of sub-section (2) of section 56 came into effect from 1.4.2007, the abovementioned sub-clause (xiv) has also been inserted with effect from the same date i.e w.e.f. 1.4.2007. This amendment will take effect retrospectively from the 1st day of Apr....
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....o substituted, so as to provide that where any bond has been issued before the 1st day of April, 2007, under a notification subject to the conditions specified therein by the Central Government in the Official Gazette under the provisions of said clause (b), as they stood immediately before their amendment by the Finance Act,2007, such bond will be deemed to be a bond notified under the provisions of new clause (b). Accordingly the notification S.O.2146(E)dated 22nd December, 2006, with the conditions specified therein, will be deemed to have been issued under the proviso to the said clause (b), so substituted. 28.7 The said proviso has been inserted with effect from the 1st day of April, 2006. [Section 18] 29. Provisions of Section 72A extended to Public Sector Company or Public Sector Companies engaged in the business of operation of aircraft. 29.1 Under the existing provisions of section 72A, the accumulated losses and unabsorbed depreciation of the amalgamating companies or company shall be set-off against the profit of the amalgamated company. Presently, the benefit is available in case of amalgamation of a company owning an industrial undertaking or a ship or a hotel with....
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....t year 2004-05 and subsequent assessment years. [Section 4,11 & 25] 32. Rationalization of provisions related to deduction of health insurance premium. 32.1 Section 80D of the Income-tax provides that in computing the total income of an assessee, being an individual or a Hindu undivided family, the sum paid by cheque to effect or to keep in force an insurance on the health of the assessee or on the health of any member of the family shall be allowed as a deduction. The maximum amount allowed as deduction is ten thousand rupees. In the case of senior citizens, the maximum amount of deduction allowed is fifteen thousand rupees. 32.2 Similarly, clause (ib) of sub-section (1) of section 36 provides for a deduction of the amount of any premium paid by cheque by the assessee, as an employer, to effect or to keep in force an insurance on the health of his employees under a scheme framed by the General Insurance Corporation formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 and approved by the Central Government or by any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of t....
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....ent year 2008-09 and subsequent assessment years [Section 27] 34. Clarification regarding developer with reference to infrastructure facility, industrial park, etc. for the purposes of section 80-IA. 34.1 Section 80-IA provides for a ten-year tax benefit to an enterprise or an undertaking engaged in development or operation and maintenance or development, operation and maintenance of infrastructure facilities, providing telecommunication service, generation or generation and distribution of power or development of an Industrial Parks or a Special Economic Zones. 34.2 The tax benefit was introduced for the reason that industrial modernization requires a massive expansion of, and qualitative improvement in, infrastructure (viz., expressways, highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract. The incentive has all along been intended to benefit developers who undertake entrepr....
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....eduction under section 80-IA will not be available to the amalgamated or demerged undertaking or enterprise. The content of this circular will supercede whatever contrary has been stated, on this issue, in any other circular, issued by the Central Board of Direct Taxes earlier. 35.2 Applicability - This amendment will take effect from 1-4-2008 and will accordingly apply in relation to the assessment year 2008-09 and subsequent assessment years. [Section 28] 36. Expansion of the scope of "infrastructure facility" for the purposes of tax benefit under section 80-IA 36.1 Explanation to clause (i) of sub-section (4) of section 80-IA defines the expression "infrastructure facility" to mean a road including toll road, a bridge, a rail system, a highway project including housing or other activities being an integral part of the highway project, a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system, a port, airport, inland waterway or inland port. 36.2 Considering the fact that navigational channels in the sea is a high risk project (involving huge capital investment) and also has long gestation period, sco....
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....e network, shall be eligible for deduction under the said section if;- · it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation established or constituted under any Central or State Act; · it has been approved by the Petroleum and Natural Gas Regulatory Board established under sub-section (1) of section 3 of the Petroleum and Natural Gas Regulatory Board Act, 2006 and notified by the Central Government in the Official Gazette; · one-third of its total pipeline capacity is available for use on common carrier basis by any person other than the assessee or an associated person; · it starts functioning on or after 1st April, 2007; and · it fulfills such other condition as may be prescribed. 38.2 The expression "associated person" for the purposes of clause (vi) has also been defined to mean a person- · who participates directly or indirectly or through one or more intermediaries in the management or control or capital of the assessee; · who holds, directly or indirectly, shares carrying not less than twenty-six percent of the voting power in the assessee; · who appoints more than half of the....
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....09 and subsequent assessment years. [Section 29] 40. Tax holiday for hotels and convention centres in specified area. 40.1 With a view to provide adequate number of hotel rooms to met the requirement for accommodating the visitors to the Commonwealth Games which is to be hosted by the country in 2010 and also to boost the number of convention centres, a new section 80-ID has been inserted to provide for deduction in respect of profits and gains from the business of hotels and convention centres in specified area. 40.2 It has been provided that where the gross total income of an assessee includes any profits and gains derived by an undertaking from the business of hotel or from the business of building, owning and operating a convention centre, hundred percent deduction of the profits and gains derived from such business shall be allowed for five consecutive assessment years beginning from the initial assessment year. Initial assessment year has been defined as · Assessment year relevant to the previous year in which the business of the hotel starts functioning ( in case of hotel); and · Assessment year relevant to the previous year in which the convention centre starts oper....
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....convention centres. 40.6 Applicability- These amendments, will take effect from the 1st day of April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent assessment years. [Section 31] 41. Extension of benefit of tax holiday in respect of undertaking located in North-Eastern States (including Sikkim). 41.1Under section 80-IC benefit of tax holiday is available to an undertaking located in any of the North Eastern states on fulfillment of statutory conditions. However, no benefit is available, under section 80-IC, if the undertaking begins to manufacture or produce an article or things or undertakes substantial expansion after the 31st March, 2007. However, in the case of Sikkim, the terminal date was 31st March 2012 under this section. This terminal date has also been amended to 31st March 2007, by the Finance Act 2007. 41.2A new section 80-IE has been inserted to provide tax benefits and it applies to any undertaking which is located in any of the North-Eastern States (including the state of Sikkim) and has, during the period beginning on 1st April, 2007 and ending on 31st March 2017, begun or begins · to manufacture or produce any ....
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.... It should not be formed by transfer to a new business machinery or plant previously used. The provisions of explanation 1 and 2 to sub-section (3) of section 80-IA shall also apply to this condition. · An assessee entitled to the deduction, in respect of the profits and gains of the undertaking under section 80-IE, would not be entitled to claim a deduction under any other section of Chapter VIA or section 10A or section 10AA or section 10B or section 10BA in relation to the said profits and gains. · In computing the total period for deduction under section 80-IE, the period for which the deduction was allowed under second proviso to section 80-IB(4) or section 80-IC or section 10C shall be included. In other words, in case of any undertaking established prior to the dates specified in section 80-IE, and eligible for deduction under section 80-IB or 10C or 80-IC, the aggregate period for claiming the deduction under section 80-IE shall not exceed 10 years; · The provisions contained in sub-section (5) and sub-sections (7) to (12) of section 80-IA shall also apply to eligible undertaking under this section. 41.7 Applicability- These amendment will take effect from 1-4-2008....
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.... at least two months before the expiry of statutory time limit for making the assessment or reassessment. Thus, a time-limit has been provided in the statute, making it obligatory for the TPO to complete audit of transfer price within the stipulated time. 43.3 The provisions of sub-section (4) of section 92CA, provides that on receipt of the order under sub-section(3) of the said section, the Assessing Officer shall proceed to compute the total income of the assessee under sub-section (4) of section 92C having regard to the Arm's length price determined under sub-section (3) by the Transfer Pricing Officer. 43.4 Sub-section (4) of section 92CA has been amended so as to provide that, on receipt of the order under sub-section(3) of section 92CA, the Assessing Officer shall proceed to compute the total income of the assessee under sub-section(4) of section 92C in conformity with the Arm's length price determined under sub-section (3) of section 92CA by the Transfer Pricing Officer. Thus, with the amendment in the provisions, the arm's length price determined by the Transfer Pricing Officer(TPO) would be binding on the Assessing Officer. 43.5 Applicability- These amendments shall ap....
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.... [Section 34] 45. Increase in the rates of Tax on distributed profits in certain cases. 45.1 Under sub-section (1) of section 115-O contained in Chapter XII-D, inter alia, any amount declared, distributed or paid by a domestic company by way of dividends on or after the 1st day of April, 2003, whether out of current or accumulated profits, shall be charged to additional income-tax or "tax on distributed profits" at the rate of twelve and one-half per cent. 45.2 The said rate of tax on distributed profits has been increased from twelve and one-half per cent. to fifteen per cent. 45.3 This amendment will take effect from 1st April, 2007. 45.4 Under sub-section (2) of section 115R contained in Chapter XII-E, inter alia, any amount of income distributed by the specified company or a Mutual Fund to its unit holders shall be chargeable to tax and such specified company or Mutual fund shall be liable to pay additional income-tax on such distributed income at the rate of- (i) twelve and one-half per cent. on income distributed to any person, being an individual or a Hindu undivided family; and (ii) twenty per cent. on income distributed to any other person. 45.5 The said sub-sec....
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....ses. The salient features of this provision are:- (i) FBT shall apply in all cases where any specified security or sweat equity shares has been allotted or transferred by the employer to his employees; (ii) FBT shall be payable in the previous year in which such allotment or transfer has taken place; (iii) the provisions of this new clause shall apply irrespective of the allotment or transfer being direct or indirect; (iv) the provisions of this new clause shall apply irrespective of the allotment or transfer being free of cost or at concessional rate; (v) the provisions of this new clause shall apply irrespective of the allotment or transfer being to current or former employee or employees; (vi) the provisions of this new clause shall apply in cases where the allotment or transfer is on or after 1st day of April, 2007. (vii) the value of fringe benefit in such cases shall be determined in accordance with the formula - A - B Where, A = the Fair Market Value (FMV) of the specified security or sweat equity shares on the date of vesting of the option; and B = the amount, if any, actually paid by, or recovered from the employee; 46.3 The expressions "specified security" a....
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....(i) the date of vesting of the option; or (ii) any date earlier than the date of the vesting of the option, not being a date which is more than 180 days earlier than the date of the vesting 46.6 Further, the Central Board of Direct Taxes has inserted a new rule 40D in the Income-tax Rules, vide notification S.O. No. 113(E), dated 18-012008, prescribing the method for determination of fair market value of specified security, not being an equity share in the company. Through the same notification, rule 40C has been amended to omit the definition of "equity share". 46.7 Consequent to insertion of clause (ba) in sub-section (1) of section 115WC providing for the valuation of fringe benefits referred to in clause (d) of sub-section (1) of section 115WB, a new sub-section (2AB) has been inserted in section 49. 46.8 This new sub-section provide that the cost of acquisition of specified security or sweat equity shares shall be the fair market value which has been taken into account while computing the value of fringe benefit under the new clause (ba) of sub-section (1) of section 115WC. 46.9 A new sub-clause (hb) has also been inserted in clause (i) of Explanation 1 to clause (42A) o....
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....section 115WB deems certain expenses or payments as fringe benefit. Proviso to clause (D) of sub-section (2) of section 115WB excludes certain expenditure on advertisement from sales promotion including publicity. Clause (v) of the proviso excludes certain expenditure on certain items of advertisement. Clause (vii) of the proviso excludes the expenditure on distribution of free samples of medicines or of medical equipment to doctors. 46.15 To expand the domain of such exceptions to provide relief to employers, clause (v) of the above proviso has been amended and clause (vii) of the above proviso has been substituted so as to provide that the expenditure on display of products and on distribution of samples of any item either free of cost or at concessional rate to any person including doctors, shall not be included in 'sales promotion including publicity' for valuation of fringe benefits. 46.16 Applicability- These amendments will take effect from 1st April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent assessment years. [Section 3, 17, 38, 39 & 41] 47. Alignment of due date of payment of advance tax on fringe benefits with that o....
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.... that where an assessee has failed to pay the advance tax payable by him on or before the due date for any instalment or where the advance tax paid by him is less than the amount payable by the due date, he shall be liable to pay simple interest at the rate of one per cent. per month for three months on the amount of shortfall with respect of each installment. For example if a company only pays 10 percent of advance tax payable by 15th June, 45 percent by 15th September, 65 percent by 15th December and 95 percent by 15th March then such company shall be liable to pay interest at · 1 percent per month for three months on shortfall of 5 percent of total advance tax on first installment, plus · 1 percent per month for three months on shortfall of 10 percent of total advance tax on third installment due, plus · 1 percent on shortfall of 5 percent on total advance tax on fourth installment. 47.7 A new sub-section (5) has also been inserted to provide that where the assessee has not paid any advance tax or has paid less than 90% of the tax assessed under section 115WE or section 115WF or section 115WJ, the assessee shall be liable to pay simple interest at the rate of one percent ....
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....ct Taxes, to dispense with any of the conditions specified in clauses (a) to (f) of the explanation. However, apart from the conditions specified in clauses (a) to (f) of the explanation to the said sub-section, documents, statements, receipts, certificate, audited reports or any other documents are also required to be annexed for claiming benefits or deductions under the Income-tax Act as specified under other sections. 48.3 A new section 139C has been inserted so as to provide that the Board may make rules providing for a class or classes of persons who may not be required to furnish documents, statements, receipts, certificate, audited reports or any other documents, which are otherwise required to be furnished along with the return under any other provisions of this Act. However, on demand the said documents, statements, receipts, certificate, audited reports or any other documents are to be produced before the Assessing Officer. 48.4 A new section 139D has also been inserted so as to provide that the Board may make rules providing for the class or classes of persons who shall be required to furnish the return of income in electronic form; the form and the manner in which the....
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....missioner of Income-tax Others [287 ITR 91 (2006)]. The Hon'ble Supreme Court observed that the direction under sub- section (2A) of section 142 of Income tax Act for special audit of the accounts of the assessee is not administrative in nature and is a quasi-judicial order. Therefore, while arriving upon a decision to order special audit under the said provisions, the principles of natural justice are required to be applied, inter-alia, to minimize arbitrariness. The Hon'ble Apex Court further observed that the expression "having regard to the nature and complexity of accounts" is significant, and if the assessee is put to a notice, he could show that the nature of the accounts is not such as would require appointment of a special auditor, and assessee could further show that what the Assessing Officer considers complex is, in fact not so. For these reasons, the Hon'ble Apex Court held that it is necessary to give an opportunity to the assessee before arriving upon a decision for ordering a special audit under sub-section (2A) of section 142. This issue again came up for consideration by the Hon'ble Supreme Court in the case of M/S Sahara India. The Hon'ble Court observed that the....
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....ommissioner except with the previous approval of the Joint Commissioner. Such provision has been made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. The provision has also been made applicable to orders of assessment passed under clause (b) of section 153B in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisitioned is made under section 132A. 50.3 Applicability- These amendments will take effect from the 1st day of June, 2007. [Section 50] 51. Providing time limit for completion of assessments for returns filed under section 172 51.1 The provisions of section 172 relate to shipping business of non-residents which, inter alia, require preparation and furnishing of the return before departure of the ship, or within a maximum period of thirty days from the date of departure of the ship subject to certain conditions. The existing provisions o....
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....The existing clause (i) of sub-section (3) of section 194A provided that deduction of income-tax at source shall not be made in a case where the amount of income by way of interest other than "Interest on securities" did not exceed five thousand rupees. 53.2 The Finance Act, 2007 has amended said sub-section (3) to provide that the limit for deduction of tax at source under the aforesaid section shall be ten thousand rupees,- (i) Where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act); (ii) Where the payer is a co-operative society engaged in carrying on the business of banking; (iii) On any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf. In other cases, the threshold limit shall be retained at five thousand rupees. 53.3 Consequential amendment has also been carried out to the provisions of section 206A relating to furnishing of quarterly return in respect of payment of interest to residents without deduction of tax at source. 53.4 The Central Government have, vide notification No. S.O. 8....
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....clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which sum is credited or paid to the account of the contractor. This amendment shall not apply in respect of payments made to a contractor by any individual or a member of a Hindu undivided family exclusively for their personal purposes. 54.6 Applicability- This amendment will take effect from the 1st day of June, 2007. [section 54] 55. Increase in the rate of TDS under section 194H to 10% and exemption from TDS thereunder from commission payable by Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited to their PCO franchisees. 55.1 The existing provisions of section 194H required deduction of tax at source on payment of commission or brokerage, the rate for deduction of tax being five per cent. 55.2 Deduction of tax at source facilitates capturing of income for tax purposes at the earliest point of time. However, deduction of tax at source in cases of payees whose income remains below taxable limit merely results in unnecessary paper work. Public Call Office (PCO) franchisees of Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited represent....
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....f ten per cent. in respect of any income payable by way of rent for the use of any machinery or plant or equipment. 56.4 Applicability- This amendment will take effect from the 1st day of June, 2007. [Section 56] 57. Enhancement of the rate of TDS under section 194J of the Income-tax Act. 57.1 Under the existing provisions of sub-section (1) of section 194J, a specified person was required to deduct an amount equal to five per cent. of any sum payable to a resident by way of fees for professional services or fees for technical services. 57.2 The data collected on tax deduction in various cases of professionals and technical experts, showed that the tax incidence in such cases was much higher than the amount of tax collected by way of deduction of tax at source at the existing rate of five per cent. 57.3 Accordingly, the Finance Act, 2007 has amended the said section to specify a higher rate of ten per cent. for tax deduction at source. The increased rate for deduction of tax at source shall be applicable to payment of any sum by way of fees for professional services or fees for technical services or royalty or any sum referred to in clause (va) of section 28. 57.4 Applicabil....
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....s chargeable on per month basis. Accordingly, the Finance Act, 2007 has changed the method for calculation of interest to per month basis from the existing per annum basis under clause (a) of sub-section (4) of section 132B, sub-section (1A) of section 201, sub-section (6A) of section 245D, rule 60(1)(a) and rule 68A(3) of the Second Schedule to the Income-tax Act, and sub-section (6A) of section 22D of the Wealth-tax Act. 59.5 The amendments regarding change of method of calculation of interest to monthly basis will be applicable in respect of interest chargeable or payable for the period commencing on or after 1st April, 2008. For any period ending on or before 31st March, 2008, interest shall continue to be charged or paid on per annum basis under the aforementioned sections which are proposed to be amended. However, in respect of any period commencing on or before 31st March, 2008 and ending after that date, such interest shall, in respect of so much of such period as falls after that date, be calculated on per month basis. 59.6 Applicability- These amendments will take effect on the 1st day of April, 2008. [Section 43, 59, 64, 81 & 86] 60. Definition of the expression "min....
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....assessment order, there will be no bar in filing an application for settlement subsequent to receipt of an intimation under section 143(1). It is not material whether time-limit for issue of notice under section 143(2) has expired or not; (b) the assessment shall be deemed to have been completed only on the date of service of assessment order to the applicant. 61.3 The provisions have further been amended to exclude the following proceedings of assessment during which an assessee shall not be allowed to make the application before the Commission— (a) assessment / reassessment proceedings in response to a notice under section 148. These proceedings shall be deemed to have commenced on the date on which notice under section 148 was issued. (b) assessment or reassessment proceedings under section 153A for each of six assessment years preceding the assessment year relevant to the previous year in which a search under section 132 was conducted or a requisition under section 132A was made; and also the assessment or reassessment proceedings in case of such persons for the assessment year relevant to the previous year in which the search under section 132 was conducted or the requis....
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....ng the application to be proceeded with. Complexity of the investigation involved in a case shall not be the criteria for admitting or rejecting the application. Further, where no order or rejection or admission of an application is passed within the aforesaid period, the application shall be deemed to have been allowed to be proceeded with. The following has also been provided- (a) the applications which were made before 1st June, 2007 but pending on that date as to whether to be rejected or allowed to be proceeded with, shall be deemed to have been allowed to be proceeded with if the tax on the income disclosed in the application and the interest is paid on or before 31st July, 2007. In case, such tax and interest is not paid on or before the aforesaid date, the application shall be deemed to have been rejected; (b) in respect of applications which were admitted before 1st June, 2007 but order of settlement was not passed before the said date, the tax on the income declared in the application and interest thereon shall have to be paid on or before 31st July, 2007. Tax and interest shall be paid by this date even in cases where the Commission has already granted any extension or....
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....the Commission shall pass such order within 9 months from the end of the month in which the application was received. In respect of applications referred to in para 61.6(a) or 61.6(b) above, the Settlement Commission shall pass the order on or before 31st March, 2008; 61.11 The provisions provided that the Commission may grant immunity from prosecution under Indian Penal Code, Income-tax Act and any other Central Act. The provisions have been amended to provide that the Commission shall not grant immunity from prosecution under any law other than Income-tax Act and Wealth-tax Act. However, in respect of pending applications, the existing provisions shall continue. 61.12 The provisions provide that the Commission may, if it is necessary or expedient to do so, reopen completed proceedings. The provisions have been amended to provide that the Commission shall not have powers to reopen the completed proceedings in a case where an application under section 245C has been filed on or after 1st June, 2007. 61.13 It has also been provided that, if the application made on or after 1.7.2007 is rejected or such application or an application referred to in para 61.6(a) above is declared inva....
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.... order of the Assessing Officer deeming him as an assessee in default. Provisions for appeal already exist against similar order passed by the Assessing Officer under sub-section (1) of section 201 whereby a person is deemed as an assessee in default if he fails to deduct or after deducting fails to pay the tax to the Government account. 62.3 The Finance Act, 2007, therefore, has inserted a new clause (hb) in sub-section (1) of section 246A to provide that a person deemed as an assessee in default may appeal before the Commissioner (Appeals). 62.4 The Finance Act, 2007 has also inserted a new sub-section (1B) in section 246A to provide that an appeal filed by an assessee in default against an order made under sub-section (6A) of section 206C on or after the 1st day of April, 2007 but before the 1st day of June, 2007 shall be deemed to have been filed before the Commissioner (Appeals) under new clause (hb) of sub-section (1) of section 246. 62.5 Applicability - These amendments will take effect from the 1st day of June, 2007. [Section 71] 63. Provision of appeal by a person denying liability to deduct tax. 63.1 The provisions of section 248, provided that where any person has....
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.... Under the pre-amended provisions of section 253, no appeal could be filed before the Appellate Tribunal against the order of rejection of approval by the Commissioner under section 80G (5) (vi). 65.2 Therefore, section 253 has been amended so as to allow an appeal to be filed against such orders of the Commissioner before the Appellate Tribunal. 65.3 Applicability- This amendment will take effect from the 1st day of June, 2007. [Section 74] 66. Prescribing time-limit for grant of stay by the Appellate Tribunal. 66.1 The provisions of section 254 provided that the Appellate Tribunal may pass an order of stay in any proceeding relating to an appeal filed before it. In such cases, it was provided that the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order. If the appeal is not decided within the period for which the stay was granted, the stay order should be vacated after the expiry of the stay period. 66.2 Section 254 has been amended so as to provide that the Appellate Tribunal, after considering the merits of the application made by the assessee, may pass an order of stay in any proceeding relating to an....
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....er section 132, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (referred to as assets in this Explanation) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income - (i) for any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, where such return has been furnished before the said date, such income has not been declared therein; or (ii) for any previous year which is to end on after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of section 271, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. However, penalty shall not be levied if certain conditions prescribed therein are fulfilled. 67.5 Explanation 5 has been amended so as to provide that provisions of said Explanation shall be applicable only in a case where search under....
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....espect of the undisclosed income. It is further provided that no penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be levied or imposed upon the assessee in respect of the undisclosed income referred to in this section. It is also provided that the provisions of section 274 and section 275 shall, so far as may be, apply in relation to the penalty leviable under the new section. 68.2 For the purposes of this section, undisclosed income has been defined to mean- (i) any income of the specified previous years represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or which has otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of the search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the b....
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....9.4 Applicability- This amendment will take effect retrospectively from the 1st day of October, 1975. [Section 78 & 93] 70. Extension of time limit set out in Rule 3 for complying with the conditions laid down in clause (ea) of Rule 4 of Part A of the Fourth Schedule to the Income-tax Act. 70.1 Rule 4 of Part A of the Fourth Schedule to the Income-tax Act provides for the conditions which are required to be satisfied by a provident fund for receiving or retaining recognition under the Income-tax Act. Clause (ea) of the said rule provides that the fund shall be of an establishment to which the provisions of sub-section (3) or sub-section (4) of section 1 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 are applicable and such establishment has been exempted under section 17 of the said Act from the operation of all or any of the provisions of any scheme referred to in that section. 70.2 With a view to set out the conditions given in clause (ea) in unambiguous terms clause (ea) has been substituted so as to provide that for receiving and retaining recognition under the Income-tax Act, the fund shall be a fund of an establishment to which the provisions of ....